Opinion: Clients beware of Connaught suicide bids

Grant Prior 12 years ago

If a deal seems too good to be true then I’m afraid it is. As clients of Connaught could be finding out to their cost in the coming weeks.

The stricken maintenance firm is now in administration after its shares were suspended and the banks refused extra finance.

The collapse of such a high profile business is a disaster for staff. But clients will also suffer as they are forced to find new contractors.

Connaught’s demise has been caused by a whole host of factors. But chief among them is bidding too low to win work.

Suicide bidding is a blight on construction and clients have to play their part by refusing the obvious temptations to go with the lowest price.

It’s no use handing a contract over to a firm which has jeopardised its financial future by quoting too low and could go pop before the job is finished.

Talk of quality, value and partnering seems like a bygone age in the current fight for the smallest margin.

If firms are daft enough to bid for work they can’t make a return on then clients have to take the lead by going with a more sensible price which will at least see the job finished.

Clients – particularly in the public sector – should be named and shamed if they encourage contractors to bid recklessly by always going for the cheapest deal.

Connaught is one of the biggest names to get caught-up in suicide bidding. But the practice is rife at all levels across the country and can only end in more failures and half-finished contracts.

Alarm bells should have been ringing last year when Morrison Facilities Services went to court over Connaught’s “abnormally low” bid to win a maintenance contract from Norwich City Council.

Morrison was the incumbent contractor but lost out when its renewal bid of £23m was beaten by a price of £17.5m from Connaught.

That’s a bid of more than 20% below Morrison’s price.

Norwich officials may have looked like they were saving cash. But that won’t be the case if they have to find a new contractor just months into the job.

The message is clear. Suicide bidding helps no-one in the long run.

It forces contractors under because no business can survive with a minimum margin strategy while clients run the risk of unfinished work and hunting for replacement firms.

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